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  • Writer's picture鋼鐵 東育

Global Market Pulse: Rate Cut Expectations Fuel Commodity Surge Amid Weakening Dollar and Rising Middle East Tensions

1. The U.S. Dollar Index continues to weaken. Last week, Federal Reserve Chairman Powell clearly indicated a rate cut next month. According to the Chicago Mercantile Exchange (CME) FedWatch Tool, federal funds futures investors predict a 100% probability of a rate cut at the Fed's September meeting, with a 61.5% chance of a 25 basis points cut.


2. Due to the weakening U.S. Dollar Index, other currencies have strengthened, leading to an influx of hot money into commodities and precious metals. Currently, LME nickel prices are rising.

   A. Oil Prices: The expectation of a rate cut has boosted NYMEX crude oil prices by 2.5%.

   B. Metals: Anticipated demand boosts have led to a broad increase in LME base metals.

   C. Precious Metals: The decline in the U.S. Dollar Index has resulted in a 1.2% rise in COMEX gold prices. Bank of America predicts further increases.


3. China's overcapacity issue, although showing no significant short-term upward trend, has led to a rise in scrap steel prices.


4. According to the latest Baltic Dry Index data as of August 19, global shipping prices have shown an 8% upward trend.


5. Weak demand due to the sluggish Chinese real estate market has led institutions to lower their estimates for iron ore prices.


6. Rising tensions in the Middle East as conflicts escalate.

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